Cameco’s $350-million uranium deal with India
Now that Corner Gas, the long-running and syndicated television show based in Saskatchewan, has moved off into re-run heaven, some may think the province has lost a bit of its international identity with the loss of this popular sitcom.
In fact, it’s been said that Corner Gas and its fictitious Dog River location (set in the actual Town of Rouleau, pop. 453, about 60km west of Regina), helped give the province notoriety beyond wheat fields, railway tracks and grain elevators.
It gave the rest of Canada, and the United States too, for that matter, a brief glimpse at what Saskatchewan looks like thanks to the occasional camera angles showing the flat landscape surrounding the Town of Rouleau.
But as most people know, Saskatchewan is far more than simply the setting for a television show; it’s also home to some of the more highly sought-after natural resources found anywhere in the world.
Aside from its wheat and other grains, Saskatchewan is where miners have also concentrated on developing vast deposits of oil and gas, potash, and making the headlines most recently, uranium.
And, thanks in part to India’s recent five-year agreement to buy about 7.1 million pounds of uranium concentrate from Cameco of Saskatoon to power some of its nuclear-powered generating plants, few other natural resources from the province have earned such international attention.
The Government of Canada estimates that the export contract is worth about $350 million, based on uranium prices at the time of signing.
But understandably, as you can probably imagine, signing the $350-million contract was not a ‘by-chance’ event; it was the result of a comprehensive undertaking that Cameco President and CEO Tim Gitzel says was a lengthy process.
“Securing this contract with India took many meetings over a period of years. It did not happen overnight and both parties (Cameco and the Indian Government) worked very long and hard to come to a mutually beneficial agreement. “This contract opens the door to a dynamic and expanding uranium market and much of the long-term growth we see coming in our industry will happen in India, and this emerging market is key to our strategy.”
Being one of the world’s larger uranium producers with more than 370 million pounds of uranium reserves (Cameco’s share) at three sites in Saskatchewan alone, and supported by another 55 million pounds at four other mines in the United States and Kazakhstan, the company is well positioned to supply India with enough uranium to generate clean electricity in its nuclear power plants for years to come.
Under this initial contract, Cameco has agreed to supply India with uranium concentrate through 2020. It’s the first contract the company has signed with India, which now operates 21 nuclear reactors providing 6000MW of nuclear capacity and about three per cent of the country’s electrical needs.
Another six reactors totaling 4300MW are currently under construction and scheduled to come online by 2017 and by 2032, the country expects to have 45,000MW of nuclear capacity.
To say that Cameco has tapped into a promising market is an understatement, but with its vast resources, it is confident that it will be ready should India continue buying its uranium after the current contract runs out in five years.
As mentioned earlier, the company has an abundance of resources around the world but it’s the operations in Saskatchewan at Key Lake, McArthur River, Rabbit Lake and Cigar Lake that make it world renown.
Tim Gitzel recently said: “Mining is a long lead-time industry, so mine startups don’t happen every day, and certainly not of the caliber of Cigar Lake, the second largest, high-grade ore body of its kind in the world.”
The Cigar Lake mine is owned by Cameco (50.025%), AREVA Resources Canada Inc. (37.1%), Idemitsu Canada Resources Ltd. (7.875%) and TEPCO Resources Inc. (5.0%)/ It’s operated by Cameco.
The mine is second in size to the McArthur River mine, which boasts more than 345 million lbs (100% basis) of reserves and is owned by Cameco (70%) and AREVA Resources (30%).
Understandably, Gitzel is proud of the Cigar Lake mine and when you look at what it has to offer, he should be proud. The orebody stretches for 2km on an east-west axis and it not only has the potential to produce 18 million pounds of uranium annually, (which the company plans to achieve by 2018) but there’s also enough uranium reserves to give the property a 15-year mine life (with significant additional mineral resources).
And furthermore, the “exceptional ore body” located at a depth of about 450m sandwiched between the Athabasca sandstone formation and the underlying Precambrian basement rocks, will keep a crew of almost 700 workers busy at Cigar Lake for the next decade and a half.
Outsiders may think the location of the mine, located about 660km north of Saskatoon, would make it difficult for Cameco to find skilled workers but as the mine’s General Manager Les Yesnik says: “The people in Northern Saskatchewan are as “exceptional” as the ore body at the Cigar Lake mine and the success of the project can largely be attributed to them.”
Drawing from a population of about 40,000 people in the entire region, Yesnik says that although Cigar Lake is among the richest high-grade uranium deposits in the world, with grades that are 100 times the world average, it’s also one of the more technically challenging mines in the world and because of that, the company relied heavily on the skills of its workers to overcome many challenges involved with putting the mine into production.
“We began developing the Cigar Lake underground mine in 2005, but development was delayed due to water inflows. To eventually overcome those water problems, we used a number of innovative methods and techniques to mine the deposit,” said Yesnik.
“Because the sandstone that overlays the deposit and basement rocks are water-bearing, with large volumes of water under significant pressure, we froze the ore zone and surrounding ground in the area to be mined using a hybrid freezing approach with a combination of underground and surface freezing to prevent water from entering the mine and to help stabilize weak rock formations.”
Through 2014, Cameco continued to drill freezeholes from surface, expand the surface freezing infrastructure and put the new freezeholes into operation.
“To manage any potential risks, the area to be mined had to meet specific ground-freezing criteria before we began any mining,” said Yesnik.
The ground freezing expertise combined with the mining techniques used by Cameco, are what set the Cigar Lake mine apart from other uranium projects around the world.
“After many years of test mining, we selected jet boring, a non-entry mining method, which we have developed and adapted specifically for the Cigar Lake deposit,” said Yesnik.
Before starting to mine with the jet boring system, the ore and surrounding rock is frozen by circulating brine, chilled to -30C, that is piped underground through a series of large pipes. It takes about a year for the rock to freeze and when ready, mining machines are safe to bore through the frozen rock to create production tunnels under the orebody.
Technically, Yesnik explained that the jet-boring system enters the tunnels and drills a pilot hole up into the frozen orebody, then the jet-boring nozzle is inserted in the pilot hole and using a high-pressure water jet, it cuts a cylindrical cavity out of the frozen ore. Loose ore water is flushed down the pilot hole then pumped into an underground sump storage facility and allowed to settle.
Once settled, the ore is moved from the slurry storage to a grinding and processing circuit, then it is pumped to the surface in a slurry form an
d eventually loaded into tanker trucks where it is transported to AREVA’s McClean Lake mill for further processing.
Once the mining is completed, each cavity in the orebody is backfilled with concrete and the jet-boring process begins again in the next part of the deposit, and on-and-on it goes.
“We have divided the orebody into production panels and will have one jet-boring machine operating in each panel, with at least three production panels being frozen at one time to achieve our full production rate of 18 million pounds of uranium per year by 2018,” said Yesnik.
To achieve its 2015 production target and continue ramping up the operation, Cameco currently has three jet-boring machines on site and later in the mine plan, the company may require a fourth to sustain annual production on 18 million pounds. The operation remains on track to achieve 2015 annual production of 6 million to 8 million packaged pounds (100% basis).
With the jet-boring systems working as planned, processing the ore is handled at the McLean Lake Mill, located about 70km northeast of Cigar Lake.
The mill is currently undergoing extensive upgrades to enable full production of 18 million pounds of uranium annually.
In May, the Cigar Lake mine announced another milestone when the operation achieved commercial production. That means the mine met all of the criteria for commercial production, including cycle time and process specifications. It’s largely a transition in the accounting treatment for costs incurred at the mine, but also demonstrates that the operation has achieved sustainable production.
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